Research and innovation are crucial in bringing about a return to competitiveness for Europe. More than simply overcoming the current crisis, the European Commission is committed to building a stable economy for the future based on smart sustainable growth. Europe 2020, the EU's growth and jobs strategy, aims to do just that.
Composite indicators can be used to measure the impact research and innovation policies have, for example the European Commission's 'Indicator of Innovation Output' which measures the extent to which ideas from innovative sectors are able to reach the market, providing better jobs and making Europe more competitive.
The JRC supports the Directorate-General for Research and Innovation by developing indicators to measure and monitor research and innovation performance in European countries and their main international competitors. The activity has various focuses of interest.
Improving the Indicator of Innovation Output
The JRC contributes to the development and testing of the Indicator of Innovation Output, and continues to build on its knowledge in the area in order to bring it to its full potential. Working in collaboration with the Directorates-General for Research and Innovation, Economic and Financial Affairs, Enterprise and Industry, and Eurostat, a number of areas of improvement have been identified and a methodology report has been published as the basis for constructing the indicator and simulations, sensitivity and robustness analysis of country rankings will be conducted in preparation to the next release of the innovation indicator, which is foreseen in summer 2015.
Updating the Research Excellence composite indicator
Following on from its development of the Research Excellence composite indicator, the JRC continues to measure the capacity of the national and European R&I system to diffuse knowledge and technology as well as of structural change towards a more knowledge-intensive economy. This entails conducting an update of the survey on relevant literature and of relevant data in connection with the phenomena of concern, and a multivariate statistical analysis with the aim to ensure the creation of a conceptually sound and statistically robust composite indicator.
Impact of diversity on excellence across European regions
Diversity is considered key to research, innovation and growth. However, little evidence exists on the exact nature of the more direct relationship between diversity and the impact of inventive activity. To fill this gap, this project offers an empirical analysis of the relationship between technological diversity and the technological impact of inventive activities across EU regions.
Using patent data from the European Patent Office (EPO), technological impact is measured in two ways. One indicator focuses on the average impact of inventive activity as measured by the number of field-normalized citations; the other focuses on high-impact inventive activity as measured by the count of patents that are within the top-1% distribution of most cited patents. Technological diversity, then, is measured by 5 indicators at different levels of technological detail; that is including, evenness, unrelated variety, related variety, similarity, and localization. Using panel fixed effect models, the effects of different measures of diversity on technological impact are estimated simultaneously.
Our results for both average technological impact and high technological impact point in the same direction. First, the evidence shows that at low levels of technological aggregation, specializing in a few closely related technologies as measured by both related variety and technological similarity has a positive effect on the technological impact of inventive activity within EU regions. Also, localization economies, as measured by spatial concentration of technologies in a few regions only, have a positive effect on the technological impact of inventive activity at low levels of technological aggregation. In contrast, both technological evenness and unrelated variety have either a negative effect or no significant effect at all on the technological impact of inventive activity across EU regions.
For research policy these results point towards at least either one of two options. One is that policymakers could steer specialization in and localization of closely neighboring technologies as to increase the technological impact of inventive activity. What is crucial here is that policymakers should have a very detailed understanding about the relations among technologies. Alternatively, however, policymakers could reconsider the reward structure of research systems, as it might well be that those with a comparative advantage in radical invention (like the US) thrive on diversification whilst those with a comparative advantage in incremental invention (like the EU) thrive on specialization and localization. The main question then becomes one of designing the reward structure such that one gets the kind of inventions – radical and/or incremental – one is looking for.
Assessing the impact of R&D Investments on Employment
The JRC explores the relationship between innovation, productivity and employment at the microeconomic level by using firm-level data. Firstly, a review of literature on empirical evidence will be carried out to identify the expected impacts of innovation on productivity growth and employment. Secondly, the firm-level dataset constructed by the European Patent Office and the Office for Harmonization in the Internal Market (which harmonises intellectual property data and various economic attributes of companies in ORBIS, a commercial database that contains comprehensive information on companies worldwide) will be explored and augmented, if needed. Thirdly, the impact of innovation on productivity and employment will be tested in econometric analyses devoting particular attention to sector-, cluster- and country-specific framework conditions. Finally, implications for innovation policy (also taking into account the economic crisis) will be discussed.
First results will be delivered in spring 2015.
Contact: Michaela Saisana (JRC)